Windstream 2014 Annual Report Download - page 186

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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7. Employee Benefit Plans and Postretirement Benefits, Continued:
Employee Savings Plan – We also sponsor an employee savings plan under section 401(k) of the Internal Revenue Code, which
covers substantially all salaried employees and certain bargaining unit employees. Windstream matches on an annual basis up to
a maximum of 4.0 percent of employee pre-tax contributions to the plan for employees contributing up to 5.0 percent of their
eligible pre-tax compensation. We recorded expense of $18.3 million, $18.1 million and $17.8 million in 2014, 2013 and 2012,
respectively, related to our matching contribution under the employee savings plan, which was included in cost of services and
selling, general and administrative in our consolidated statements of operations. Expense related to our 2014 matching contribution
expected to be made in Windstream stock is included in share-based compensation expense in the accompanying consolidated
statements of cash flow. During 2014, we contributed 2.7 million shares of our common stock to the plan for the 2013 annual
matching contribution. At the time of this contribution, the shares had a value of approximately $21.6 million as determined by
the plan trustee. During 2013, we contributed $20.4 million of our common stock to the plan for the 2012 annual matching
contribution.
8. Share-Based Compensation Plans:
Under the Amended and Restated 2006 Equity Incentive Plan (the “Incentive Plan”), we may issue a maximum of 35.0 million
equity stock awards in the form of restricted stock, restricted stock units, stock appreciation rights or stock options. As of
December 31, 2014, the Incentive Plan had remaining capacity of 17.7 million awards. As of December 31, 2014, we had additional
remaining capacity of 2.0 million awards from a similar equity incentive plan acquired in the PAETEC acquisition.
Restricted Stock and Restricted Stock Unit Activity - During 2014, 2013 and 2012, our Board of Directors approved grants of
restricted stock and restricted stock units to officers, executives, non-employee directors and certain management employees.
These grants include the standard annual grants to this employee and director groups as a key component of their annual incentive
compensation plan and one-time grants may include time-based and performance based awards. Time-based awards generally
vest ratably over a service period of two or three years. Each recipient of the performance-based restricted stock units may vest
in a number of shares from zero to 150.0 percent of their award based on attainment of certain operating targets, some of which
are indexed to the performance of Standard & Poor’s 500 Stock Index, over a three-year period.
The vesting periods and grant date fair value for restricted stock and restricted stock units issued was as follows for the years
ended December 31:
2014 2013 2012
(Thousands)
Number of
Shares
Number of
Shares
Number of
Shares
Vest ratably over a three-year service period 2,929.3 2,254.0 1,543.7
Vest ratably over a two-year service period 18.3 68.4 —
Vest variably over a three-year service period 247.3 186.1 54.7
Vest contingently over a three-year performance period 1,176.3 786.7 723.5
Vest one year from date of grant, service based - granted to
non-employee directors 121.0 81.5 51.4
Vest three years from date of grant, service based 189.3 — 4.0
Total granted 4,681.5 3,376.7 2,377.3
Grant date fair value (Millions) $ 39.3 $ 32.6 $ 29.4
For performance based restricted stock units granted in 2014 the operating targets for the first vesting period were approved by
the Board of Directors in March 2014. For the performance based restricted stock granted in 2013, the operating targets for the
first vesting period were approved by the Board of Directors in February 2013. For performance based restricted stock granted in
2012, the operating targets for the first and second vesting periods were approved by the Board of Directors in February 2012 and
2013, respectively. For measurement periods prior to 2014, each of the operating targets were met by the end of their respective
measurement periods. The operating targets for the performance based restricted stock units granted in 2014 were not met and
these awards were forfeited.